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Tricare to pay for some lab-developed tests in pilot program

Jul. 15, 2014 - 04:24PM   |  
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The Defense Health Agency is launching a pilot program Friday that will allow Tricare to pay for some medical tests developed by laboratories.

Under the pilot, Tricare will cover laboratory developed tests, or LDTs, that are not approved by the Food and Drug Administration.

While Tricare is restricted by law from paying for unapproved medications or equipment, the FDA has been slow to strengthen its oversight of LDTs, leaving the military health system unable to reimburse private providers for the tests even as their development and use continues to grow.

The DHA pilot program will let Tricare cover some of the more broadly ordered tests, such as those used to diagnose cystic fibrosis in utero and genetic tests for inherited cancers, according to DHA health care operations director Army Maj. Gen. Richard Thomas.

“We want to look at the ability for us to address emerging technology and treatments, and we are not as flexible in addressing them as we want to be, so we are looking at ways to provide these capabilities for our patients,” Thomas said.

Tricare stopped covering many LDTs in January 2013 because changes made by the American Medical Association to its testing procedure codes led Tricare to place the tests on the government’s “no pay” list, a Tricare official said. That move left laboratory companies with more than $10 million in outstanding bills.

Thomas said DoD now is reimbursing the companies for certain approved tests, including the cystic fibrosis diagnostic, and has paid more than $3.5 million in reimbursements.

Once the pilot is underway, beneficiaries or labs that were denied reimbursement for an LDT since Jan. 1, 2013, can file to have their claim reprocessed.

The FDA has taken a hands-off approach to LDTs because they once were considered simple and posed little risk to patients. But as technology has advanced, so have LDTs; some are now quite costly and controversial.

Tighter regulations sought

On July 2, five senators urged the White House Office of Management and Budget director to accelerate the release of draft guidance for the FDA that would allow the administration to tighten regulations on these tests.

At issue are LDTs such as one for Lyme disease, about which the Centers for Disease Control and Prevention has expressed “serious concerns” because of false-positive results and misdiagnoses.

A positive test for Lyme, including questionable tests on those who display persistent symptoms but show no evidence of active infection, can result in lengthy, costly and unproven treatments with antibiotics.

“Incorrect results mean that patients either will not seek out the care and therapy that is needed or will be subject to treatments that do not work or are harmful,” the senators wrote.

Making decisions on which 30 to 40 tests make the cut in the Pentagon’s new pilot project is the DoD Joint Lab Working Group, which is considering effectiveness, accuracy and accepted use, Thomas said.

“There has been an explosion of technology, especially in terms of genetic testing,” he said. “Our goal is to be able to conduct a fair assessment to practice state-of-the-art medicine so if there’s emerging technologies or treatments, we can provide efficacious coverage.”

The American Community Lab Association, whose members include laboratories serving Tricare beneficiaries, praised the new pilot program but said their members still don’t understand DoD’s reasoning for refusing to pay for the tests.

“Tricare, like Medicare, Medicaid and commercial insurers, has a long history of covering LDTs,” ACLA president Alan Mertz said.

A step forward

Still, the new program will benefit Tricare patients and ACLA members, Mertz said.

“ACLA commends the DHA for this step forward to restore coverage to molecular pathology testing services for all Tricare beneficiaries,” he said.

Pentagon officials could not provide an estimated cost for the pilot because they have not yet determined which tests will be covered. They added, however, that the pilot may contain a silver lining — it could actually save DoD a few dollars.

Thomas noted that some military health facilities have an in-house capability to process some LDTs; under the new program, those facilities might handle the tests for all DoD labs.“That would be a significant cost-savings to the taxpayer,” he said.

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